[March 03, 2015] |
|
Veeva Announces Fourth Quarter and Fiscal Year 2015 Results
Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud
solutions for life sciences, today announced results for its fiscal
fourth quarter and fiscal year ended January 31, 2015.
"It was another strong year for Veeva. We are executing well against our
goal to become a growing, billion dollar industry cloud company," said
CEO Peter Gassner. "We are expanding our solutions and continuing to
deliver extraordinary value to one of the world's largest industries.
Veeva CRM is leading the industry to multichannel, Veeva Vault is
becoming the standard for content management in life sciences, and Veeva
Network is emerging as a key solution to address their customer data
challenges. We are well positioned to deliver another solid year of
financial results and success for our customers."
Fiscal 2015 Fourth Quarter Results:
-
Revenues: Total revenues for the fourth quarter were $87.0
million, up from $62.8 million one year ago, an increase of 39%
year-over-year. Subscription services revenues were $66.5 million, up
from $45.7 million one year ago, an increase of 46% year-over-year.
-
Net income and non-GAAP net income:(1) Fourth
quarter net income was $13.3 million, compared to $6.2 million one
year ago, an increase of 113% year-over-year. Non-GAAP net income for
the fourth quarter was $16.8 million, compared to $9.5 million one
year ago, an increase of 77% year-over-year.
-
Net income per share and non-GAAP net income per share:(1)
For the fourth quarter, fully diluted net income per share was $0.09,
while non-GAAP fully diluted net income per share was $0.12.
Fiscal Year 2015 Results:
-
Revenues: Total revenues for fiscal year ended January 31, 2015
were $313.2 million, up from $210.2 million in the year prior, an
increase of 49%. Subscription services revenues were $233.1 million,
up from $146.6 million in the year prior, an increase of 59%.
-
Net income and non-GAAP net income:(1) Fiscal
year 2015 net income was $40.4 million, compared to $23.6 million in
the year prior, an increase of 71%. Non-GAAP net income for fiscal
year 2015 was $53.2 million, compared to $30.1 million in the year
prior, an increase of 77%.
-
Net income per share and non-GAAP net income per share:(1)
For fiscal year 2015, fully diluted net income per share was $0.28,
while non-GAAP fully diluted net income per share was $0.37.
"Our dedication to customer success drove an outstanding subscription
services revenue retention rate(2) of 138% for the year,"
said CFO Tim Cabral. "Veeva's unique combination of growth,
profitability, and cash flow stems from the value that our
industry-specific cloud solutions are able to drive for our customers."
Fiscal Year 2015 and Recent Highlights:
-
Expanding customer base and growth across all product lines - Veeva
ended its fiscal year with 276 total customers, up from 198 last year.
This represents strong growth across all product lines, with 191 Veeva
CRM customers, 135 Veeva Vault customers, and 22 Veeva Network
customers at the close of fiscal year 2015.(3)
-
Making multichannel CRM a reality for the industry - Veeva
brought multichannel to the industry, more than tripling its Veeva CRM
Approved Email customer count for the year and launching new offerings
to support digital engagement. The fourth quarter saw notable global
Veeva CRM projects start at two top 50 pharma customers who are each
deploying Veeva CRM multichannel capabilities.
-
Becoming the standard for content management in life sciences -
Veeva continued to gain significant traction with Vault signing its
first top 10 pharma customer for Veeva Vault QualityDocs in the fourth
quarter and recently adding a fourth top 10 pharma customer for Vault
eTMF. Overall the Veeva Vault customer count nearly doubled for the
year.
-
Delivering the first global customer master solution - Veeva
signed new deals and expansion deals in multiple geographies in the
fourth quarter. In the quarter, Veeva also announced it will deliver
customer reference data for Europe; available today for the UK, with
France, Germany, Italy, and Spain expected later this year. Over the
course of the year, the Veeva Network customer count more than tripled.
-
Customer success driving high revenue retention - Veeva
continued to achieve exceptional subscription services revenue
retention rates, reporting 138% for the year.(2)
Financial Outlook:
Veeva is providing guidance for its fiscal first quarter ending April
30, 2015 as follows:
-
Total revenues between $87 and $88 million.
-
Non-GAAP operating income between $23 and $24 million.
-
Non-GAAP fully diluted net income per share of $0.10.
Veeva is providing guidance for its fiscal year ending January 31, 2016
as follows:
-
Total revenues between $390 and $395 million.
-
Non-GAAP operating income between $103 and $108 million.
-
Non-GAAP fully diluted net income per share between $0.43 and $0.45.
Conference Call Information
|
What:
|
|
Veeva's Fiscal 2015 Fourth Quarter and Full Year Results Conference
Call
|
When:
|
|
Tuesday, March 3, 2015
|
Time:
|
|
1:30 p.m. PT (4:30 p.m. ET)
|
Live Call:
|
|
1-877-201-0168, domestic
|
|
|
1-647-788-4901, international
|
|
|
Conference ID 7993 5170
|
Webcast:
|
|
ir.veeva.com
|
|
|
|
(1) This press release uses non-GAAP financial metrics that
are adjusted for the impact of various GAAP items. See the sections
titled "Non-GAAP Financial Measures" and the tables entitled
"Reconciliation of GAAP to Non-GAAP Financial Measures" below for
details.
(2) We calculate our annual subscription services revenue
retention rate for a particular fiscal year by dividing (i) annualized
subscription revenue as of the last day of that fiscal year from those
customers that were also customers as of the last day of the prior
fiscal year by (ii) the annualized subscription revenue from all
customers as of the last day of the prior fiscal year. Annualized
subscription revenue is calculated by multiplying the daily subscription
revenue recognized on the last day of the fiscal year by 365. This
calculation includes the impact on our revenues from customer
non-renewals, deployments of additional users or decreases in users,
deployments of additional solutions or discontinued use of solutions by
our customers, and price changes for our solutions.
(3) The customer counts by product line exceed the total
customer count because some customers subscribe to multiple product
lines. Total customer count also includes 53 customers who purchase
other data products and data services.
About Veeva Systems
Veeva Systems Inc. is a leader in cloud-based software for the global
life sciences industry. Committed to innovation, product excellence, and
customer success, Veeva has more than 275 customers, ranging from the
world's largest pharmaceutical companies to emerging biotechs. Veeva is
headquartered in the San Francisco Bay Area, with offices in Europe,
Asia, and Latin America. For more information, visit www.veeva.com.
Forward-looking Statements
This release contains forward-looking statements, including statements
regarding Veeva's future financial outlook and financial performance,
market growth, the benefits from the use of Veeva's solutions, our
strategies, and general business conditions. Any forward-looking
statements contained in this press release are based upon Veeva's
historical performance and its current plans, estimates and expectations
and are not a representation that such plans, estimates, or expectations
will be achieved. These forward-looking statements represent Veeva's
expectations as of the date of this press announcement. Subsequent
events may cause these expectations to change, and Veeva disclaims any
obligation to update the forward-looking statements in the future. These
forward-looking statements are subject to known and unknown risks and
uncertainties that may cause actual results to differ materially,
including (i) adverse changes in general economic or market conditions,
particularly in the life sciences industry; (ii) delays or reductions in
information technology spending, particularly in the life sciences
industry, including as a result of mergers in the life sciences
industry; (iii) dependence on revenues from our Veeva CRM solution, and
the rate of adoption of our new products; (iv) competitive factors,
including but not limited to pricing pressures, industry consolidation,
difficulty securing rights to access, host or integrate with
complementary third party products or data used by our customers, entry
of new competitors and new applications and marketing initiatives by our
competitors; (v) our ability to manage our growth effectively; (vi) our
limited operating history, which makes it difficult to predict future
results; (vii) the development of the market for enterprise cloud
services, particularly in the life sciences industry; (viii) acceptance
of our applications and services by customers, including renewals of
existing subscriptions and purchases of subscriptions for additional
users and solutions; (ix) breaches in our security measures,
unauthorized access to our customers' data, or system availability or
performance problems associated with our data centers or computing
infrastructure; (x) our expectation that the future growth rate of our
revenues will decline, and that as our costs increase, we may not be
able to generate sufficient revenues to sustain the level of
profitability we have achieved in the past or achieve profitability in
the future; (xi) loss of one or more key customers; and (xii) changes in
sales that may not be immediately reflected in our results due to our
subscription model.
Additional risks and uncertainties that could affect Veeva's financial
results are included under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," in the company's filing on Form 10-Q for the period ended
October 31, 2014, which is available on the company's website at www.veeva.com
under the Investors section and on the SEC's website at www.sec.gov.
Further information on potential risks that could affect actual results
will be included in other filings Veeva makes with the SEC from time to
time.
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands)
|
(Unaudited)
|
|
|
January 31,
|
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
129,253
|
|
$
|
262,507
|
Short-term investments
|
|
|
268,620
|
|
|
25,625
|
Accounts receivable, net
|
|
|
92,661
|
|
|
58,433
|
Deferred income taxes
|
|
|
4,815
|
|
|
2,075
|
Other current assets
|
|
|
6,488
|
|
|
5,092
|
Total current assets
|
|
|
501,837
|
|
|
353,732
|
Property and equipment, net
|
|
|
28,203
|
|
|
2,445
|
Capitalized internal-use software, net
|
|
|
1,240
|
|
|
1,585
|
Goodwill
|
|
|
4,850
|
|
|
4,850
|
Intangible assets, net
|
|
|
4,904
|
|
|
6,551
|
Other long-term assets
|
|
|
3,856
|
|
|
1,145
|
Total assets
|
|
$
|
544,890
|
|
$
|
370,308
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
3,886
|
|
$
|
2,117
|
Accrued compensation and benefits
|
|
|
6,497
|
|
|
8,750
|
Accrued expenses and other liabilities
|
|
|
8,939
|
|
|
7,931
|
Income tax payable
|
|
|
3,241
|
|
|
439
|
Deferred revenue
|
|
|
112,960
|
|
|
67,380
|
Total current liabilities
|
|
|
135,523
|
|
|
86,617
|
Other long-term liabilities
|
|
|
2,534
|
|
|
3,595
|
Total liabilities
|
|
|
138,057
|
|
|
90,212
|
Stockholders' equity:
|
|
|
|
|
Class A common stock
|
|
|
-
|
|
|
-
|
Class B common stock
|
|
|
1
|
|
|
1
|
Additional paid-in capital
|
|
|
317,881
|
|
|
231,534
|
Accumulated other comprehensive income
|
|
|
26
|
|
|
19
|
Retained earnings
|
|
|
88,925
|
|
|
48,542
|
Total stockholders' equity
|
|
|
406,833
|
|
|
280,096
|
Total liabilities and stockholders' equity
|
|
$
|
544,890
|
|
$
|
370,308
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
Three Months Ended January 31,
|
|
Fiscal Year Ended January 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Subscription services
|
|
$
|
66,535
|
|
$
|
45,686
|
|
$
|
233,063
|
|
|
$
|
146,621
|
Professional services and other
|
|
|
20,477
|
|
|
17,117
|
|
|
80,159
|
|
|
|
63,530
|
Total revenues
|
|
|
87,012
|
|
|
62,803
|
|
|
313,222
|
|
|
|
210,151
|
Cost of revenues(4):
|
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
|
15,210
|
|
|
11,790
|
|
|
55,005
|
|
|
|
36,199
|
Cost of professional services and other
|
|
|
15,946
|
|
|
12,568
|
|
|
60,653
|
|
|
|
46,403
|
Total cost of revenues
|
|
|
31,156
|
|
|
24,358
|
|
|
115,658
|
|
|
|
82,602
|
Gross profit
|
|
|
55,856
|
|
|
38,445
|
|
|
197,564
|
|
|
|
127,549
|
Operating expenses(4):
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
11,742
|
|
|
7,858
|
|
|
41,156
|
|
|
|
26,327
|
Sales and marketing
|
|
|
15,328
|
|
|
12,768
|
|
|
56,203
|
|
|
|
41,507
|
General and administrative
|
|
|
8,103
|
|
|
6,511
|
|
|
30,239
|
|
|
|
20,411
|
Total operating expenses
|
|
|
35,173
|
|
|
27,137
|
|
|
127,598
|
|
|
|
88,245
|
Operating income
|
|
|
20,683
|
|
|
11,308
|
|
|
69,966
|
|
|
|
39,304
|
Other expense, net
|
|
|
1,660
|
|
|
365
|
|
|
2,780
|
|
|
|
804
|
Income before income taxes
|
|
|
19,023
|
|
|
10,943
|
|
|
67,186
|
|
|
|
38,500
|
Provision for income taxes
|
|
|
5,697
|
|
|
4,696
|
|
|
26,803
|
|
|
|
14,885
|
Net income
|
|
$
|
13,326
|
|
$
|
6,247
|
|
$
|
40,383
|
|
|
$
|
23,615
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common stockholders, basic and diluted:
|
|
$
|
13,288
|
|
$
|
6,145
|
|
$
|
40,138
|
|
|
$
|
10,405
|
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.10
|
|
$
|
0.05
|
|
$
|
0.31
|
|
|
$
|
0.20
|
Diluted
|
|
$
|
0.09
|
|
$
|
0.04
|
|
$
|
0.28
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net income per share
attributable to common stockholders:
|
|
|
|
|
|
Basic
|
|
|
130,345
|
|
|
122,578
|
|
|
127,713
|
|
|
|
51,725
|
Diluted
|
|
|
144,737
|
|
|
143,221
|
|
|
144,204
|
|
|
|
68,024
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gains on available-for-sale investments
|
|
$
|
47
|
|
$
|
4
|
|
$
|
76
|
|
|
$
|
10
|
Net change in cumulative foreign currency translation gain (loss)
|
|
|
3
|
|
|
4
|
|
|
(69
|
)
|
|
|
4
|
Comprehensive income
|
|
$
|
13,376
|
|
$
|
6,255
|
|
$
|
40,390
|
|
|
$
|
23,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
$
|
92
|
|
$
|
60
|
|
$
|
273
|
|
|
$
|
118
|
Cost of professional services and other
|
|
|
561
|
|
|
444
|
|
|
2,272
|
|
|
|
902
|
Research and development
|
|
|
1,141
|
|
|
805
|
|
|
3,844
|
|
|
|
1,700
|
Sales and marketing
|
|
|
931
|
|
|
818
|
|
|
3,221
|
|
|
|
1,788
|
General and administrative
|
|
|
1,359
|
|
|
787
|
|
|
4,715
|
|
|
|
2,442
|
Total stock-based compensation
|
|
$
|
4,084
|
|
$
|
2,914
|
|
$
|
14,325
|
|
|
$
|
6,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
|
|
Three Months Ended January 31,
|
|
Fiscal Year Ended January 31,
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
13,326
|
|
|
$
|
6,247
|
|
|
|
$
|
40,383
|
|
|
$
|
23,615
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
Depreciation and amortization
|
|
|
986
|
|
|
|
858
|
|
|
|
|
3,929
|
|
|
|
2,410
|
|
Amortization of premiums on short-term investments
|
|
|
832
|
|
|
|
88
|
|
|
|
|
2,176
|
|
|
|
364
|
|
Stock-based compensation
|
|
|
4,084
|
|
|
|
2,914
|
|
|
|
|
14,325
|
|
|
|
6,950
|
|
Deferred income taxes
|
|
|
(4,192
|
)
|
|
|
(1,522
|
)
|
|
|
|
(4,268
|
)
|
|
|
(1,781
|
)
|
Bad debt expense
|
|
|
186
|
|
|
|
56
|
|
|
|
|
227
|
|
|
|
35
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(47,606
|
)
|
|
|
(9,886
|
)
|
|
|
|
(34,455
|
)
|
|
|
(19,738
|
)
|
Income taxes
|
|
|
5,515
|
|
|
|
949
|
|
|
|
|
3,326
|
|
|
|
(4,784
|
)
|
Other current and long-term assets
|
|
|
(1,008
|
)
|
|
|
(834
|
)
|
|
|
|
(4,652
|
)
|
|
|
(2,951
|
)
|
Accounts payable
|
|
|
1,682
|
|
|
|
(357
|
)
|
|
|
|
1,738
|
|
|
|
(1,303
|
)
|
Accrued expenses and other current liabilities
|
|
|
(3,868
|
)
|
|
|
3,831
|
|
|
|
|
(1,077
|
)
|
|
|
9,690
|
|
Deferred revenue
|
|
|
28,292
|
|
|
|
13,866
|
|
|
|
|
45,580
|
|
|
|
28,473
|
|
Other long-term liabilities
|
|
|
476
|
|
|
|
15
|
|
|
|
|
467
|
|
|
|
773
|
|
Net cash provided by (used in) operating activities
|
|
|
(1,295
|
)
|
|
|
16,225
|
|
|
|
|
67,699
|
|
|
|
41,753
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
(68,227
|
)
|
|
|
(14,317
|
)
|
|
|
|
(401,955
|
)
|
|
|
(21,403
|
)
|
Maturities and sales of investments
|
|
|
59,553
|
|
|
|
4,850
|
|
|
|
|
156,860
|
|
|
|
9,700
|
|
Purchases of property and equipment
|
|
|
(907
|
)
|
|
|
(299
|
)
|
|
|
|
(26,979
|
)
|
|
|
(1,860
|
)
|
Acquisitions, net of cash acquired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(12,149
|
)
|
Capitalized internal-use software development costs
|
|
|
(112
|
)
|
|
|
(104
|
)
|
|
|
|
(413
|
)
|
|
|
(1,117
|
)
|
Proceeds from note receivable-related party
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
253
|
|
Payments for restricted cash and deposits
|
|
|
12
|
|
|
|
2
|
|
|
|
|
21
|
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(9,681
|
)
|
|
|
(9,868
|
)
|
|
|
|
(272,466
|
)
|
|
|
(26,576
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from early exercise of common stock options
|
|
|
-
|
|
|
|
4
|
|
|
|
|
-
|
|
|
|
229
|
|
Proceeds from exercise of common stock options
|
|
|
1,499
|
|
|
|
42
|
|
|
|
|
5,813
|
|
|
|
514
|
|
Net proceeds from offerings
|
|
|
-
|
|
|
|
(1,211
|
)
|
|
|
|
34,495
|
|
|
|
214,523
|
|
Proceeds from Employee Stock Purchase Plan
|
|
|
-
|
|
|
|
-
|
|
|
|
|
5,951
|
|
|
|
-
|
|
Restricted stock units acquired to settle employee tax withholding
liability
|
|
|
(15
|
)
|
|
|
-
|
|
|
|
|
(15
|
)
|
|
|
-
|
|
Excess tax benefits from employee stock plans
|
|
|
6,610
|
|
|
|
174
|
|
|
|
|
25,341
|
|
|
|
174
|
|
Net cash provided by (used in) financing activities
|
|
|
8,094
|
|
|
|
(991
|
)
|
|
|
|
71,585
|
|
|
|
215,440
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(72
|
)
|
|
|
-
|
|
Net change in cash and cash equivalents
|
|
|
(2,882
|
)
|
|
|
5,366
|
|
|
|
|
(133,254
|
)
|
|
|
230,617
|
|
Cash and cash equivalents at beginning of period
|
|
|
132,135
|
|
|
|
257,141
|
|
|
|
|
262,507
|
|
|
|
31,890
|
|
Cash and cash equivalents at end of period
|
|
$
|
129,253
|
|
|
$
|
262,507
|
|
|
|
$
|
129,253
|
|
|
$
|
262,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
Veeva has provided in this release financial information that has not
been prepared in accordance with generally accepted accounting
principles in the United States, or GAAP. This information includes
non-GAAP net income, non-GAAP fully diluted net income per share,
non-GAAP operating income, and non-GAAP operating margin. Veeva uses
these non-GAAP financial measures internally for budgeting and resource
allocation purposes and in analyzing its financial results. Veeva
believes they are useful to investors, as a supplement to GAAP measures,
as a means to evaluate period-to-period comparisons, in evaluating
Veeva's ongoing operating results and trends and in comparing its
financial measures with other companies in Veeva's industry, many of
which present similar non-GAAP financial measures to investors. These
non-GAAP measures are adjusted for the impact of expenses associated
with stock-based compensation, amortization of purchased intangibles,
capitalization of expenses associated with development of internal-use
software and the subsequent amortization of the capitalized expenses,
and the tax effect of all of these non-GAAP adjustments.
As described above, Veeva may exclude the following items from its
non-GAAP measures:
-
Stock-based compensation expenses. Veeva excludes stock-based
compensation expenses from its non-GAAP measures primarily because
they are non-cash expenses and management finds it useful to exclude
certain non-cash charges to assess the appropriate level of various
operating expenses to assist in budgeting, planning and forecasting
future periods. Moreover, because of varying available valuation
methodologies, subjective assumptions and the variety of award types
that companies can use under FASB ASC Topic 718, Veeva believes
excluding stock-based compensation expenses allows investors to make
meaningful comparisons between our recurring core business operating
results and those of other companies.
-
Amortization of purchased intangibles. Veeva incurs amortization
expense for purchased intangible assets in connection with
acquisitions of certain businesses and technologies. Amortization of
intangible assets is inconsistent in amount and frequency and is
significantly affected by the timing and size of acquisitions.
Management finds it useful to exclude these variable charges to assess
the appropriate level of various operating expenses to assist in
budgeting, planning and forecasting future periods. Investors should
note that the use of intangible assets contributed to our revenues
earned during the periods presented and will contribute to our future
period revenues as well. Amortization of purchased intangible assets
will recur in future periods.
-
Capitalization of internal-use software development expenses and the
subsequent amortization of the capitalized expenses. Veeva capitalizes
certain costs incurred for the development of computer software for
internal use and then amortizes those costs over the estimated useful
life. Capitalization and amortization of software development costs
can vary significantly depending on the timing of products reaching
technological feasibility and being made generally available.
Moreover, because of the variety of approaches taken and the
subjective assumptions made by other companies in this area, Veeva
believes that excluding the effects of capitalized software costs
allows investors to make more meaningful comparisons between our
operating results and those of other companies.
-
Income tax effects on the difference between GAAP and non-GAAP costs
and expenses. The income tax effects that are excluded from the
non-GAAP measures relate to the tax impact on the difference between
GAAP and non-GAAP costs and expenses due to stock-based compensation,
purchased intangibles and capitalized internal-use software for GAAP
and non-GAAP measures.
There are limitations in using non-GAAP financial measures because
non-GAAP financial measures are not prepared in accordance with GAAP and
may be different from non-GAAP financial measures used by other
companies. The non-GAAP financial measures are limited in value because
they exclude certain items that may have a material impact upon our
reported financial results. In addition, they are subject to inherent
limitations as they reflect the exercise of judgments by management
about which items are adjusted to calculate our non-GAAP financial
measures. Veeva compensates for these limitations by analyzing current
and future results on a GAAP basis as well as a non-GAAP basis and also
by providing GAAP measures in our public disclosures.
Non-GAAP financial measures should not be considered in isolation from,
or as a substitute for, financial information prepared in accordance
with GAAP. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP financial
measure and not to rely on any single financial measure to evaluate our
business. A reconciliation of GAAP to the non-GAAP financial measures
has been provided in the tables below.
Veeva is not able, at this time, to provide GAAP targets for operating
income and fully diluted net income per share for the first quarter and
full year of its fiscal year ending January 31, 2016 because of the
difficulty of estimating certain items that are excluded from non-GAAP
operating income and non-GAAP fully diluted net income per share, such
as charges related to stock-based compensation expense, capitalization
of internal-use software development expenses and the subsequent
amortization of the capitalized expenses and amortization of
acquisition-related intangibles, the effect of which may be significant.
The following table reconciles the specific items excluded from GAAP net
income in the calculation of non-GAAP net income and non-GAAP net income
per share for the periods shown below:
VEEVA SYSTEMS INC.
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
(Dollars in thousands)
|
(Unaudited)
|
|
|
Three Months Ended January 31,
|
|
Fiscal Year Ended January 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Cost of subscription services revenues on a GAAP basis
|
|
$
|
15,210
|
|
|
$
|
11,790
|
|
|
$
|
55,005
|
|
|
$
|
36,199
|
|
Stock-based compensation expense
|
|
|
(92
|
)
|
|
|
(60
|
)
|
|
|
(273
|
)
|
|
|
(118
|
)
|
Amortization of purchased intangibles(5)
|
|
|
(370
|
)
|
|
|
(564
|
)
|
|
|
(1,478
|
)
|
|
|
(917
|
)
|
Amortization of internal-use software(6)
|
|
|
(186
|
)
|
|
|
(502
|
)
|
|
|
(818
|
)
|
|
|
(502
|
)
|
Cost of subscription services revenues on a non-GAAP basis
|
|
$
|
14,562
|
|
|
$
|
10,664
|
|
|
$
|
52,436
|
|
|
$
|
34,662
|
|
|
|
|
|
|
|
|
|
|
Gross margin on subscription services revenues on a GAAP basis
|
|
|
77.1
|
%
|
|
|
74.2
|
%
|
|
|
76.4
|
%
|
|
|
75.3
|
%
|
Stock-based compensation expense
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Amortization of purchased intangibles(5)
|
|
|
0.6
|
|
|
|
1.3
|
|
|
|
0.6
|
|
|
|
0.6
|
|
Amortization of internal-use software(6)
|
|
|
0.3
|
|
|
|
1.1
|
|
|
|
0.4
|
|
|
|
0.4
|
|
Gross margin on subscription services revenues on a non-GAAP basis
|
|
|
78.1
|
%
|
|
|
76.7
|
%
|
|
|
77.5
|
%
|
|
|
76.4
|
%
|
|
|
|
|
|
|
|
|
|
Cost of professional services and other revenues on a GAAP basis
|
|
$
|
15,946
|
|
|
$
|
12,568
|
|
|
$
|
60,653
|
|
|
$
|
46,403
|
|
Stock-based compensation expense
|
|
|
(561
|
)
|
|
|
(444
|
)
|
|
|
(2,272
|
)
|
|
|
(902
|
)
|
Amortization of purchased intangibles(5)
|
|
|
-
|
|
|
|
194
|
|
|
|
-
|
|
|
|
-
|
|
Cost of professional services and other revenues on a non-GAAP basis
|
|
$
|
15,385
|
|
|
$
|
12,318
|
|
|
$
|
58,381
|
|
|
$
|
45,501
|
|
|
|
|
|
|
|
|
|
|
Gross margin on professional services and other revenues on a GAAP
basis
|
|
|
22.1
|
%
|
|
|
26.6
|
%
|
|
|
24.3
|
%
|
|
|
27.0
|
%
|
Stock-based compensation expense
|
|
|
2.8
|
|
|
|
2.6
|
|
|
|
2.9
|
|
|
|
1.4
|
|
Amortization of purchased intangibles(5)
|
|
|
-
|
|
|
|
(1.2
|
)
|
|
|
-
|
|
|
|
-
|
|
Gross margin on professional services and other revenues on a
non-GAAP basis
|
|
|
24.9
|
%
|
|
|
28.0
|
%
|
|
|
27.2
|
%
|
|
|
28.4
|
%
|
|
|
|
|
|
|
|
|
|
Gross profit on a GAAP basis
|
|
$
|
55,856
|
|
|
$
|
38,445
|
|
|
$
|
197,564
|
|
|
$
|
127,549
|
|
Stock-based compensation expense
|
|
|
653
|
|
|
|
504
|
|
|
|
2,545
|
|
|
|
1,020
|
|
Amortization of purchased intangibles(5)
|
|
|
370
|
|
|
|
370
|
|
|
|
1,478
|
|
|
|
917
|
|
Amortization of internal-use software(6)
|
|
|
186
|
|
|
|
502
|
|
|
|
818
|
|
|
|
502
|
|
Gross profit on a non-GAAP basis
|
|
$
|
57,065
|
|
|
$
|
39,821
|
|
|
$
|
202,405
|
|
|
$
|
129,988
|
|
|
|
|
|
|
|
|
|
|
Gross margin on total revenues on a GAAP basis
|
|
|
64.2
|
%
|
|
|
61.2
|
%
|
|
|
63.1
|
%
|
|
|
60.7
|
%
|
Stock-based compensation expense
|
|
|
0.8
|
|
|
|
0.8
|
|
|
|
0.8
|
|
|
|
0.5
|
|
Amortization of purchased intangibles(5)
|
|
|
0.4
|
|
|
|
0.6
|
|
|
|
0.4
|
|
|
|
0.4
|
|
Amortization of internal-use software(6)
|
|
|
0.2
|
|
|
|
0.8
|
|
|
|
0.3
|
|
|
|
0.3
|
|
Gross margin on total revenues on a non-GAAP basis
|
|
|
65.6
|
%
|
|
|
63.4
|
%
|
|
|
64.6
|
%
|
|
|
61.9
|
%
|
|
|
|
|
|
|
|
|
|
Research and development expense on a GAAP basis
|
|
$
|
11,742
|
|
|
$
|
7,858
|
|
|
$
|
41,156
|
|
|
$
|
26,327
|
|
Stock-based compensation expense
|
|
|
(1,141
|
)
|
|
|
(805
|
)
|
|
|
(3,844
|
)
|
|
|
(1,700
|
)
|
Capitalization of internal-use software
|
|
|
113
|
|
|
|
104
|
|
|
|
413
|
|
|
|
1,117
|
|
Amortization of internal-use software(6)
|
|
|
-
|
|
|
|
340
|
|
|
|
-
|
|
|
|
-
|
|
Research and development expense on a non-GAAP basis
|
|
$
|
10,714
|
|
|
$
|
7,497
|
|
|
$
|
37,725
|
|
|
$
|
25,744
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expense on a GAAP basis
|
|
$
|
15,328
|
|
|
$
|
12,768
|
|
|
$
|
56,203
|
|
|
$
|
41,507
|
|
Stock-based compensation expense
|
|
|
(931
|
)
|
|
|
(818
|
)
|
|
|
(3,221
|
)
|
|
|
(1,788
|
)
|
Amortization of purchased intangibles(5)
|
|
|
(43
|
)
|
|
|
(43
|
)
|
|
|
(172
|
)
|
|
|
(105
|
)
|
Sales and marketing expense on a non-GAAP basis
|
|
$
|
14,354
|
|
|
$
|
11,907
|
|
|
$
|
52,810
|
|
|
$
|
39,614
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense on a GAAP basis
|
|
$
|
8,103
|
|
|
$
|
6,511
|
|
|
$
|
30,239
|
|
|
$
|
20,411
|
|
Stock-based compensation expense
|
|
|
(1,359
|
)
|
|
|
(787
|
)
|
|
|
(4,715
|
)
|
|
|
(2,442
|
)
|
General and administrative expense on a non-GAAP basis
|
|
$
|
6,744
|
|
|
$
|
5,724
|
|
|
$
|
25,524
|
|
|
$
|
17,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
|
(Dollars in thousands, except per share data)
|
(Unaudited)
|
|
|
Three Months Ended January 31,
|
Fiscal Year Ended January 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating expense on a GAAP basis
|
|
$
|
35,173
|
|
|
$
|
27,137
|
|
|
$
|
127,598
|
|
|
$
|
88,245
|
|
Stock-based compensation expense
|
|
|
(3,431
|
)
|
|
|
(2,410
|
)
|
|
|
(11,780
|
)
|
|
|
(5,930
|
)
|
Amortization of purchased intangibles(5)
|
|
|
(43
|
)
|
|
|
(43
|
)
|
|
|
(172
|
)
|
|
|
(105
|
)
|
Capitalization of internal-use software
|
|
|
113
|
|
|
|
104
|
|
|
|
413
|
|
|
|
1,117
|
|
Amortization of internal-use software(6)
|
|
|
-
|
|
|
|
340
|
|
|
|
-
|
|
|
|
-
|
|
Operating expense on a non-GAAP basis
|
|
$
|
31,812
|
|
|
$
|
25,128
|
|
|
$
|
116,059
|
|
|
$
|
83,327
|
|
|
|
|
|
|
|
|
|
|
Operating income on a GAAP basis
|
|
$
|
20,683
|
|
|
$
|
11,308
|
|
|
$
|
69,966
|
|
|
$
|
39,304
|
|
Stock-based compensation expense
|
|
|
4,084
|
|
|
|
2,914
|
|
|
|
14,325
|
|
|
|
6,950
|
|
Amortization of purchased intangibles(5)
|
|
|
413
|
|
|
|
413
|
|
|
|
1,650
|
|
|
|
1,022
|
|
Capitalization of internal-use software
|
|
|
(113
|
)
|
|
|
(104
|
)
|
|
|
(413
|
)
|
|
|
(1,117
|
)
|
Amortization of internal-use software(6)
|
|
|
186
|
|
|
|
162
|
|
|
|
818
|
|
|
|
502
|
|
Operating income on a non-GAAP basis
|
|
$
|
25,253
|
|
|
$
|
14,693
|
|
|
$
|
86,346
|
|
|
$
|
46,661
|
|
|
|
|
|
|
|
|
|
|
Operating margin on a GAAP basis
|
|
|
23.8
|
%
|
|
|
18.0
|
%
|
|
|
22.3
|
%
|
|
|
18.7
|
%
|
Stock-based compensation expense
|
|
|
4.7
|
|
|
|
4.6
|
|
|
|
4.6
|
|
|
|
3.3
|
|
Amortization of purchased intangibles(5)
|
|
|
0.4
|
|
|
|
0.7
|
|
|
|
0.5
|
|
|
|
0.5
|
|
Capitalization of internal-use software
|
|
|
(0.1
|
)
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
(0.5
|
)
|
Amortization of internal-use software(6)
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.2
|
|
Operating margin on a non-GAAP basis
|
|
|
29.0
|
%
|
|
|
23.4
|
%
|
|
|
27.6
|
%
|
|
|
22.2
|
%
|
|
|
|
|
|
|
|
|
|
Net income on a GAAP basis
|
|
$
|
13,326
|
|
|
$
|
6,247
|
|
|
$
|
40,383
|
|
|
$
|
23,615
|
|
Stock-based compensation expense
|
|
|
4,084
|
|
|
|
2,914
|
|
|
|
14,325
|
|
|
|
6,950
|
|
Amortization of purchased intangibles(5)
|
|
|
413
|
|
|
|
413
|
|
|
|
1,650
|
|
|
|
1,022
|
|
Capitalization of internal-use software
|
|
|
(113
|
)
|
|
|
(104
|
)
|
|
|
(413
|
)
|
|
|
(1,117
|
)
|
Amortization of internal-use software(6)
|
|
|
186
|
|
|
|
162
|
|
|
|
818
|
|
|
|
502
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(1,123
|
)
|
|
|
(144
|
)
|
|
|
(3,573
|
)
|
|
|
(865
|
)
|
Net income on a non-GAAP basis
|
|
$
|
16,773
|
|
|
$
|
9,488
|
|
|
$
|
53,190
|
|
|
$
|
30,107
|
|
|
|
|
|
|
|
|
|
|
Net income allocated to participating securities on a GAAP basis
|
|
$
|
(38
|
)
|
|
$
|
(102
|
)
|
|
$
|
(245
|
)
|
|
$
|
(13,210
|
)
|
Net income allocated to participating securities from non-GAAP
adjustments(7)
|
|
|
(10
|
)
|
|
|
(53
|
)
|
|
|
(77
|
)
|
|
|
12,581
|
|
Net income allocated to participating securities on a non-GAAP
basis
|
|
|
(48
|
)
|
|
|
(155
|
)
|
|
|
(322
|
)
|
|
|
(629
|
)
|
Net income attributable to common stockholders on a non-GAAP basis
|
|
$
|
16,725
|
|
|
$
|
9,333
|
|
|
$
|
52,868
|
|
|
$
|
29,478
|
|
|
|
|
|
|
|
|
|
|
Diluted shares on a GAAP basis
|
|
|
144,737
|
|
|
|
143,221
|
|
|
|
144,204
|
|
|
|
68,024
|
|
Impact of assumed conversion of preferred stock(7)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,247
|
|
Diluted shares on a non-GAAP basis
|
|
|
144,737
|
|
|
|
143,221
|
|
|
|
144,204
|
|
|
|
129,271
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share on a GAAP basis
|
|
$
|
0.09
|
|
|
$
|
0.04
|
|
|
$
|
0.28
|
|
|
$
|
0.15
|
|
Stock-based compensation expense
|
|
|
0.04
|
|
|
|
0.03
|
|
|
|
0.10
|
|
|
|
0.06
|
|
Amortization of purchased intangibles(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
0.01
|
|
Capitalization of internal-use software
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.01
|
)
|
Amortization of internal-use software(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
-
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(0.01
|
)
|
|
|
-
|
|
|
|
(0.03
|
)
|
|
|
(0.01
|
)
|
Impact of assumed conversion of preferred stock(7)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.03
|
|
Diluted net income per share on a non-GAAP basis
|
|
$
|
0.12
|
|
|
$
|
0.07
|
|
|
$
|
0.37
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Reflects the reclassification of certain expenses
previously reflected in cost of professional services and other revenues
to cost of subscription services revenues. The reclassification of these
expenses was booked in the quarterly period ended January 31, 2014.
(6) Reflects the reclassification of certain expenses
previously reflected in research and development expense to cost of
subscription services revenues. The reclassification of these expenses
for the fiscal year ended January 31, 2014 was booked entirely in the
quarterly period ended January 31, 2014.
(7) In computing the fully diluted shares for non-GAAP
purposes, the 85,000,000 shares of convertible preferred stock that was
issued and outstanding for the proportionate part of the year prior to
our initial public offering were assumed to be converted to common
shares. The 85,000,000 shares of convertible preferred stock were fully
converted to common stock during the third fiscal quarter of fiscal year
2014.
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